Barchart Morning Call 7/22

BARCHART MORNING CALL

Monday, July 22nd, 2013View Older Reports

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OVERNIGHT MARKETS AND NEWS

Sep E-mini S&Ps (ESU13 +0.03%) are trading slightly higher on continued optimism about earnings and on today's sharp 40 bp drop in Portugal's 10-year bond yield in a favorable development for the Eurozone debt crisis. The Euro Stoxx 50 index this morning is up +0.24%. Asian stocks today closed higher nearly across the board on support from last Friday's news that China is liberalizing bank deposit rates and Sunday's news that Japanese Prime Minister Abe's party won a decisive victory in Sunday's upper house elections: Japan Nikkei +0.47%, Hong Kong Hang Seng +0.25%, China CSI 300 index +0.53%, Taiwan +0.54%, Australia +0.60%, Singapore +0.66%, South Korea +0.48%, India +0.05%, and Turkey -0.12%. Commodity prices are higher by +0.44% this morning on improved global economic optimism. Sep WTI crude oil (CLU13 +0.31%) is up +0.49%, Sep gasoline (RBU13 -0.40%) is up +0.03%, metals are higher (Aug gold (GCQ13 +1.86%) +1.83%, Sep copper (HGU13 +1.08%) +1.08%), and grains and softs are mixed. The dollar index (DXY00 -0.29%) is down -0.36% on reduced safe-haven demand and EUR/USD (^EURUSD) is up +0.30% on positive Portuguese political news. USD/JPY (^USDJPY) is down -0.71% with JPY seeing strength on the strong LDP victory in Sunday's upper house elections. Sep 10-year T-note prices (ZNU13 +0.10%) are up +4 ticks.
There was good political news in Portugal after Portugal's President Anibal Cavaco Silva in a speech on Sunday night ruled out early elections and said that, "The government has the support of an unequivocal majority in parliament." Portuguese 10-year bond yields fell sharply by 40 bp to 6.40% today, extending the sharp 3-session decline to about 80 bp. The government headed by Prime Minister Pedro Passos Coelho will now have the power to stick to Portugal's bailout plan.
Japanese Prime Minister Abe won a sweeping victory in Sunday's elections in the upper house of parliament, which gives him a strong grip on the government to continue to execute his stimulus program. The victory was in line with market expectations.
The statement from the 2-day G-20 meeting of finance ministers and central bank chiefs that concluded on Saturday contained little surprising news. The statement said that G-20 countries will pursue "carefully calibrated and clearly communicated" policy moves, which was a clear shot to the Fed after the recent surge in U.S. Treasury yields after Mr. Bernanke in mid-June laid out the Fed's plans for ending QE3. Emerging markets were hit with some serious collateral damage from the surge in U.S. Treasury yields, which caused them to urge Fed Chairman Bernanke to be more careful in discussing the end of QE3. The rest of the industrialize world also generally saw higher yields as well caused by the surge in U.S. Treasury yields.
Japan June supermarket sales rose +2.7% y/y, which was a substantial improvement from May's -1.2% y/y. Japan June convenience store sales rose +0.1% y/y, up from -1.2% y/y in May.

U.S. STOCK PREVIEW

This will be a busy week with a raft of U.S. economic reports, the peak Q2 earnings week, and the Treasury’s auction of $99 billion in 2-year, 5-year and 7-year T-notes. The markets will also be looking ahead to next week’s FOMC meeting (July 30-31) in which there is at least a small chance that the Fed might decide to start tapering QE3. Today’s June existing home sales report is expected to show an increase of +1.4% to 5.25 million, adding to the +4.2% increase to 5.18 million seen in May. There are 8 of the S&P 500 companies that report earnings today: Gannett (consensus $0.58), Hasbro (0.34), Halliburton (0.72), Kimberly Clark (1.39), McDonalds (1.40), Netflix (0.40), Texas Instruments (0.41), Zions Bancorporation (0.41). Conferences this week include: Bio/Pharma Forcasting and Modeling on Tuesday, Fortune Brainstorm TECH 2013 on Tuesday, China Venture Capital & Private Equity Forum on Wed/Thu.
Sep E-mini (ESU13 +0.03%) S&Ps this morning are trading slightly higher by +0.75 points (+0.04%) on (1) general optimism about earnings going into this peak Q2 earnings week, and (2) this morning's sharp 40 bp drop in the Portugal 10-year bond yield on confirmation there will be no early elections that could threaten Portugal's bailout plan. The U.S. stock market on Friday closed mixed. Stocks had opened lower after technology stocks fell when Google and Microsoft reported disappointing Q2 earnings results, but stocks recovered, except for the Nasdaq, after China announced it had removed the floor on lending rates, which may boost bank lending and growth in China that may benefit the global economy. Closes: S&P 500 +0.16%, Dow Jones -0.03%, Nasdaq 100 -1.07%.

OVERNIGHT U.S. STOCK MOVERS

• Kimberly Clark (KMB +0.59%) reported Q2 adjusted EPS this morning of $1.41, slightly above the consensus of $1.39. The company also said it will realign cost structure and streamline European manufacturing.
• Halliburton (HAL +2.44%) reported Q2 EPS of 73 cents, 1 cent above the consensus of 72 cents.
• Facebook (FB -1.15%) will create a streamlined social network for simple phones, according to the NY Times.
• Apple (AAPL -1.58%) said its developers website was taken down because of a hacking attack.
• Hasbro (HAS -2.37%) reported Q2 adjusted EPS of 29 cents, below the consensus of 34 cents.
• Dick's Sporting (DKS -0.55%) was upgraded to Overweight from Equal Weight at Morgan Stanley.

MARKET COMMENTS

Sep 10-year T-notes (ZNU13 +0.10%) this morning are up 4 ticks. Sep 10-year T-note prices on Friday closed higher on carry-over support from Wednesday's and Thursday's comments from Fed Chairman Bernanke that a reduction in Fed bond buying wasn't imminent. A recovery in stocks limited gains in Treasuries. Closes: TYU3 +11.00, FVU3 +5.25.
The dollar index (DXY00 -0.29%) this morning is down -0.29 points (-0.36%) on reduced safe-haven demand with the general strength in global stocks today. EUR/USD (^EURUSD) is up +0.00039 (+0.30%) on Portugal's positive political news. USD/JPY (^USDJPY) is down -0.71 yen (-0.71%) with the yen seeing strength after Prime Minister Abe's LDP party won a decisive victory in upper house elections on Sunday. The dollar index on Friday closed lower on negative carry-over from Fed Chairman Bernanke's comments Thursday that it was "way too early to make any judgment" as to whether the Fed will start to taper its bond purchases. Another negative for the dollar was the recovery in stocks, which reduced the dollar's safe-haven demand. Closes: Dollar index -0.176 (-0.21%), EUR/USD +0.00303 (+0.23%), USD/JPY +0.205 (+0.20%).
Sep WTI (CLU13 +0.31%) crude oil this morning is up +0.53 (+0.49%) and Sep gasoline (RBU13 -0.40%) is up +0.0008 (+0.03%) on general economic optimism today. Crude oil and gasoline prices on Friday closed higher with crude prices rising to a 16-month high and gasoline prices climbing to a 4-month high. Bullish factors include (1) the action by the PBOC to remove the floor for lending rates in China, which may boost bank lending and economic growth, and (2) strength in gasoline on supply concerns after the Philadelphia Energy Solutions refinery and Canada's Irving Oil refinery were shut for repairs, which may limit gasoline supplies on the U.S. East Coast. Closes: CLU3 +0.06 (+0.06%), RBU3 +0.0132 (+0.43%).

GLOBAL EVENT CALENDAR07/22/2013

US	0830 ET	Jun Chicago Fed national activity index, May -0.30.
	1000 ET	Jun existing home sales expected +1.4% to 5.25 million, May +4.2% to 5.18 million.
	1100 ET	USDA weekly grain export inspections.
	1500 ET	USDA Jun Cold Storage.
	1600 ET	USDA Crop Progress.

U.S. STOCK CALENDAR07/22/2013

Company Name	Symbol	Time	Event Description	Period	EPS Est (US$)
Gannett Co Inc	GCI US	Bef-mkt	Q2 2013 Earnings Release	Q2 2013	0.584
Halliburton Co	HAL US	Bef-mkt	Q2 2013 Earnings Release	Q2 2013	0.721
Kimberly-Clark Corp	KMB US	Bef-mkt	Q2 2013 Earnings Release	Q2 2013	1.389
Hasbro Inc	HAS US	Bef-mkt	Q2 2013 Earnings Release	Q2 2013	0.343
NVR Inc	NVR US	Bef-mkt	Q2 2013 Earnings Release	Q2 2013	11.962
RPM International Inc	RPM US	Bef-mkt	Q4 2013 Earnings Release	Q4 2013	0.669
Lennox International Inc	LII US	Bef-mkt	Q2 2013 Earnings Release	Q2 2013	1.191
McDonald's Corp	MCD US	7:58	Q2 2013 Earnings Release	Q2 2013	1.404
Six Flags Entertainment Corp	SIX US	8:00	Q2 2013 Earnings Release	Q2 2013	0.742
Hasbro Inc	HAS US	8:30	Q2 2013 Earnings Call	Q2 2013
Halliburton Co	HAL US	9:00	Q2 2013 Earnings Call	Q2 2013
Six Flags Entertainment Corp	SIX US	9:00	Q2 2013 Earnings Call	Q2 2013
Lennox International Inc	LII US	9:30	Q2 2013 Earnings Call	Q2 2013
Gannett Co Inc	GCI US	10:00	Q2 2013 Earnings Call	Q2 2013
Kimberly-Clark Corp	KMB US	10:00	Q2 2013 Earnings Call	Q2 2013
RPM International Inc	RPM US	10:00	Q4 2013 Earnings Call	Q4 2013
McDonald's Corp	MCD US	11:00	Q2 2013 Earnings Call	Q2 2013
Bank of Hawaii Corp	BOH US	14:00	Q2 2013 Earnings Call	Q2 2013
Netflix Inc	NFLX US	16:05	Q2 2013 Earnings Release	Q2 2013	0.396
Texas Instruments Inc	TXN US	16:30	Q2 2013 Earnings Release	Q2 2013	0.412
WR Berkley Corp	WRB US	17:00	Q2 2013 Earnings Call	Q2 2013
Texas Instruments Inc	TXN US	17:30	Q2 2013 Earnings Call	Q2 2013
Zions Bancorporation	ZION US	17:30	Q2 2013 Earnings Call	Q2 2013
Netflix Inc	NFLX US	18:00	Q2 2013 Earnings Call	Q2 2013
Crane Co	CR US	Aft-mkt	Q2 2013 Earnings Release	Q2 2013	1.036
Hexcel Corp	HXL US	Aft-mkt	Q2 2013 Earnings Release	Q2 2013	0.468
IDEX Corp	IEX US	Aft-mkt	Q2 2013 Earnings Release	Q2 2013	0.742
WR Berkley Corp	WRB US	Aft-mkt	Q2 2013 Earnings Release	Q2 2013	0.677
Zions Bancorporation	ZION US	Aft-mkt	Q2 2013 Earnings Release	Q2 2013	0.414
Bank of Hawaii Corp	BOH US		Q2 2013 Earnings Release	Q2 2013	0.83

Barchart Morning Call 1/23

Barchart Morning Call

Barchart.com - Mon Jan 23, 7:00AM CST

Overnight Developments

• Global stocks this morning are mostly higher with the Euro Stoxx 50 up +0.35% and Mar S&Ps up +1.00 point at a 5-3/4 month high. The dollar index fell to a 3-1/2 week low and most commodities rose with Feb gold at a 5-week high as European finance ministers gathered in Brussels to discuss new budget rules and a Greek debt swap. The euro rose to a 2-1/2 week high against the dollar and yields on Greek government debt fell after the FT Deutschland reported that unnamed government officials said negotiators for Greece and the IIF broadly agreed on terms of a debt swap over the weekend. Crude oil rose in overnight electronic trade after Dutch Foreign Minister Uri Rosenthal said EU foreign ministers adopted sanctions that will ban imports of crude and oil products from Iran as of Jul 1 as part of measures to ratchet up pressure on Iran's nuclear program. Limiting gains in European stocks was the statement from Germany's Bundesbank that economic growth in Germany may have come to a "standstill" in Q4 of 2011 because of the European debt crisis, while Jan French business confidence unexpectedly fell -3 points to a 23-month low of 91, weaker than expectations of a +1 point increase to 95.
• Asian stocks today closed mixed with Japan down -0.01%, China and South Korea closed for holiday, Australia -0.34%, India +0.08%. Asian exporters rallied as rising home sales in the U.S. bolstered the view the U.S. economy will continue to strengthen while falling European borrowing costs add to optimism that the region's debt crisis may be easing. Japanese internet-related companies rose after BNP Paribas said the sector may be undervalued, while Moody?s Investors Service said the action by China to slow non-bank financing growth will help it to achieve a ?soft landing? and reduce concerns about systemic risk. Limiting gains in Asian stocks were losses in companies that receive revenue from Europe as EU finance ministers continue to craft a long-term plan to tackle the region's debt crisis while Greek government negotiators continue to try to reach agreement that will lighten the country's debt burden.

Overnight U.S. Stock News

• March S&Ps this morning are trading up +1.00 point. The US stock market on Friday settled mixed as strong earnings from IBM lifted the Dow to a 6-month high while weaker-than-expected U.S. existing home sales and concerns over Chinese economic growth pressured the overall market: Dow Jones +0.76%, S&P 500 +0.07%, Nasdaq Composite -0.06%. Bullish factors on Friday included (1) strength in the Dow after gains in IBM, which compromises 11% of the share-price weighting of the Dow, when the company forecast earnings will increase to at least $14.85 a share this year, better than analysts' estimates of $14.81, (2) strength in technology stocks after Microsoft gained when it said Christmas sales were strong for its video-game consoles and its Kinect sensor controllers and a rally in Intel which rose after it predicted strong Q1 revenue and said the shortage of disk drives that had slowed personal computer production may be ending and (3) optimism that European officials are moving closer to resolving the region's debt crisis after a draft of a budget treaty obtained by Bloomberg showed European governments are working toward tougher rules on budget deficits.
• Bearish factors included (1) concern over Chinese economic growth after the Jan HSBC flash China manufacturing PMI rose +0.1 to 48.4 and shows China's manufacturing activity may have contracted for a third month, (2) the smaller-than-expected increase in Dec existing home sales (+5.0% to 4.61 million versus expectations of +5.2% to 4.65 million), and (3) comments from IMF Managing Director Lagarde who said the world economy is decelerating and faces "significant and urgent challenges."

Today's Market Focus

• March 10-year T-notes this morning are down -3.5 ticks. T-note prices on Friday fell to a 2-week low and settled lower on reduced safe-haven demand from the European debt crisis on signs European leaders are making progress resolving the crisis along with technical selling after the 10-year T-note yield climbed above 2.00%: TYH2 -14.0, FVH2 -5.5, EDM2 unchanged. Bearish factors included (1) reduced safe-haven demand for Treasuries on signs European officials are moving closer to resolving the region's debt crisis after a draft of a budget treaty obtained by Bloomberg showed European governments are working toward tougher rules on budget deficits as the budget treaty will require a centralized "correction mechanism" to be triggered automatically in cases of "significant" deviations from a target structural deficit of 0.5% of GDP and (2) technical selling and long liquidation of T-notes after the 10-year yield climbed above 2.00%. Bullish factors included (1) the smaller-than-expected increase in Dec existing home sales (+5.0% to 4.61 million versus expectations of +5.2% to 4.65 million) and (2) comments from IMF Managing Director Lagarde who said the world economy is decelerating and faces "significant and urgent challenges."
• The dollar index this morning is weaker and at a 2-1/2 week low with the dollar/yen -0.09 yen and the euro/dollar +0.66 cents. The dollar index on Friday rebounded from a 2-week low and settled higher as the euro weakened on disappointment that talks between Greece and its creditors dragged on for a third day without resolution: Dollar Index +0.007, USDJPY -0.080, EURUSD -0.00389. Bullish factors included (1) a drop in the euro on disappointment that a meeting between Greek officials and private creditors on a debt swap plan failed find a resolution after 3 days of meetings and (2) concern that global growth may slow further after the Jan HSBC flash China manufacturing PMI rose +0.1 to 48.4 and shows China's manufacturing activity contracted for a third month. Bearish factors included (1) reduced demand for dollars after the 3-month cross-currency basis swap, the rate banks pay to convert euro interest payments into dollars, narrowed to 76 bp below the euro interbank offered rate, the lowest in 5-1/4 months and (2) strength in the British pound which rallied to a 2-week high against the dollar after Dec U.K. retail sales increased.
• Mar crude oil prices this morning are up +86 cents a barrel and Mar gasoline is +1.27 cents per gallon. Crude oil and gasoline prices Friday settled lower after a preliminary reading of Chinese manufacturing activity contracted for a third month in Jan and as Greek debt talks dragged on for a third day, which fueled concern the European debt crisis may worsen and slow European growth and fuel demand: CLH12 -$2.21, RBH12 -3.25. Bearish factors included (1) the stronger dollar, which undercuts most commodities, (2) the +0.1 increase in the Jan HSBC flash China manufacturing PMI to 48.8, which indicates Chinese manufacturing activity may contract for a third month and reduce energy demand and consumption, (3) concern the European debt crisis may not be resolved anytime soon as a meeting between Greek officials and private creditors on a debt swap plan failed to resolve their differences after a third day of meetings, and (4) comments from IMF Managing Director Lagarde who said the world economy is decelerating and faces "significant and urgent challenges." Bullish factors included (1) the increase in Dec U.S. existing home sales to an 11-month high, which signals economic strength that may lead to increased fuel demand and (2) ongoing tensions between Iran and Western nations that may lead to a disruption in Middle East oil exports after Iran's ambassador to Russia said the deployment of the U.S. Navy in the Persian Gulf is a "provocation."

Today's U.S. Earnings Reports Earnings reports (confirmed releases, sorted by mkt cap): TXN-Texas Instruments (BEST earnings consensus $0.39), VMW-VMware (0.69), HAL-Halliburton (0.99), CSX-CSX Corp. (0.44), KSU-Kansas City Southern (0.79), WDC-Western Digital (0.71), ALB-Albemarle (1.10), ZION-Zions Bancorporation (0.33), PLCM-Polycom (0.29), WWD-Woodward (0.45), CR-Crane (0.90), ELS-Equity Lifestyle Properties (0.15), PKG-Packagng Corp of America (0.37), BOH-Bank of Hawaii (0.82), CATY-Cathay General Bancorp (0.29).
Global Financial Calendar

Monday 1/23/12
United States
1130 ET	Weekly 3-mo and 6-mo T-bill auctions.
France
0245 ET	Jan French business confidence indicator expected +1 to 95, Dec -2 to 94.
Canada
0830 ET	Dec Canada leading indicators, Nov +0.8%.
Euro-Zone
0515 ET	ECB Council members Jens Weidmann and Christian Noyer speak in Paris.
1000 ET	Jan Euro-Zone consumer confidence expected -0.3 to -21.4, Dec -0.7 to -21.1.
1100 ET	Euro-Zone finance ministers meet in Brussels.
n/a	Euro-Zone finance ministers meet to discuss how to respond to Standard & Poor?s downgrade of the European Financial Stability Facility.

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